Skills, not public sector IT cuts, trouble Logica

Financially speaking, Europe’s largest IT services suppliers all had roughly the same experience during 2009 – a decline in sales on the continent being offset to some degree by growth in the UK.

Logica was no exception. “All in all, 2009 was a good year for our UK business,” says the company’s UK CEO, Craig Boundy, who oversaw a 6% increase in divisional revenues to £750 million during the year. “We performed very well in a tough marketplace, and we grew revenue with some big orders coming in like the Police National Database, while resigning our contract with the Crown Prosecution Service.”

As that suggests, the public sector is an important source of revenue for the company (although Boundy insists that its private sector work held up well too). So it might be forgiven a modicum of trepidation for the coming year, as government spending cuts in general – and IT spending cuts in particular – are on the cards whichever party wins the general election.

But if that trepidation exists, it is not evident in Boundy. “We know that whichever new government comes in, they will need to control spending on their IT projects and their business process outsourcing projects,” he says. “But I’m not worried about its impact on my business because we operate a number of projects that are critical to the running of society.”

Indeed, in March 2010 Logica announced a £10 million, five-year IT infrastructure management contract with the Citizens Advice Bureau, and the company is also working with the service on a new case management system.

Boundy says the latter project represents a new breed of public sector engagement that moves away from simply automating public services towards improving and optimising them through the power of information technology.

“What we’re doing with [the CAB] goes beyond the typical case management system and into how you derive the information from cases, identify the underlying themes and feed that back to government and influence policy,” he explains. “That’s what the role of these projects is becoming.”

Boundy expects demand to grow in the coming year, and will be hiring to meet it. “We’re going to recruit twice as many graduates in the UK this year as we did last year,” he explains, adding that graduate intake in 2008 at Logica UK was essentially zero.

This is an area in which he is less optimistic, however: “The UK is not turning out enough graduates with the right skills that we need – graduates who are ready to make an immediate contribution from day one. “This is not because it’s too difficult,” he adds, “because other countries are doing it successfully.”

More than just his own business, Boundy says that the future of the UK is at stake. “We’ve got an opportunity in the services plus technology business; we’ve got the English language and we have a heritage of developing new technologies,” he says. “But if we can’t turn out the graduates, we won’t capitalise on that opportunity.”

This kind of long-term thinking is increasingly prevalent among UK businesses, Boundy says. Having come through the past 18 months in survival mode, sustainability – in both a financial and environmental sense – is now high on their list of priorities, he reports.

Logica now hopes those companies will pursue sustainable efficiencies through process re-engineering, outsourcing and technology. Boundy admits, however, that the cost issue still crops up in every customer conversation. That means that the company, and the IT services industry as a whole, is not out of the woods yet.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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